EN BANC

[G.R. No. 71169. December 22, 1988.]

JOSE D. SANGALANG and LUTGARDA D. SANGALANG ,

petitioners, FELIX C. GASTON and DOLORES R. GASTON, JOSE
V. BRIONES and ALICIA R. BRIONES, and BEL-AIR VILLAGE
ASSOCIATION, INC., intervenors-petitioners, vs. INTERMEDIATE
APPELLATE COURT, and AYALA CORPORATION, respondents.

[G.R. No. 74376.]

BEL-AIR VILLAGE ASSOCIATION, INC. , petitioner, vs. THE

INTERMEDIATE APPELLATE COURT, ROSARIO DE JESUS
TENORIO, and CECILIA GONZALVEZ, respondents.

[G.R. No. 76394.]

BEL-AIR VILLAGE ASSOCIATION, INC. , petitioner, vs. THE

COURT OF APPEALS, and EDUARDO and BUENA
ROMUALDEZ, respondents.

[G.R. No. 78182.]

BEL-AIR VILLAGE ASSOCIATION, INC. , petitioner, vs. COURT

OF APPEALS, DOLORES FILLEY, and J. ROMERO &
ASSOCIATES, respondents.

[G.R. No. 82281.]

BEL-AIR VILLAGE ASSOCIATION, INC. , petitioner, vs. COURT

OF APPEALS, VIOLETA MONCAL, and MAJAL DEVELOPMENT
CORPORATION, respondents.

Sangco, Anastacio, Castañeda & Duran Law Office for petitioners &
private intervenors-petitioners.
Raul S. Sison Law Offices for intervenor-petitioner Bel-Air Village
Association, Inc.
Renato L. Dela Fuente for respondent Ayala Corporation.
Raul S. Sison Law Offices for petitioner.
Sergio L. Guadiz for private respondents.
Raul S. Sison Law Offices for petitioner.
Gruba, Tanlimco, Lamson and Apuhin Law Offices for respondents.
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 Funk & Associates for petitioners.
Tee Tomas & Associates for respondents.
Funk & Associates for petitioner.
Castillo, Laman, Tan & Associates for private respondents.

DECISION

SARMIENTO, J : p

Before the Court are five consolidated petitions, 1 docketed as G.R.

Nos. 71169, 74376, 76394, 78182, and 82281 hereof, in the nature of
appeals (by certiorari under Rule 45 of the Rules of Court) from five
decisions of the Court of Appeals, denying specific performance and
damages. LexLib

The proceedings were commenced at the first instance by Jose

Sangalang, joined by his wife Lutgarda Sangalang, both residents of No. 110
Jupiter Street, Makati, Metro Manila (G.R. No. 71169) to enforce by specific
performance restrictive easement upon property, specifically the Bel-Air
Village subdivision in Makati, Metro Manila, pursuant to stipulations
embodied in the deeds of sale covering the subdivision, and for damages.
Later, the Sangalangs were joined by Felix Gaston, a resident of No. 64
Jupiter Street of the same municipality, and by Mr. and Mrs. Jose and Alicia
Briones, both of No. 66 Jupiter Street. Pending further proceedings, the Bel-
Air Village Association, Inc. (BAVA), an incorporated homeowners'
association, entered its appearance as plaintiff-in-intervention.
BAVA itself had brought its own complaints, four in number, likewise
for specific performance and damages to enforce the same "deed
restrictions." (See G.R. Nos. 74376, 76394, 78182, and 82281.)
ANTECEDENTS FACTS
I. G.R. No. 71169
The facts are stated in the decision appealed from. We quote:
xxx xxx xxx

(1) Bel-Air Village is located north of Buendia Avenue extension

(now Sen. Gil J. Puyat Ave.) across a stretch of commercial block from
Reposo Street in the west up to Zodiac Street in the east. When Bel-Air
Village was planned, this block between Reposo and Zodiac Streets
adjoining Buendia Avenue in front of the village was designated as a
commercial block. (Copuyoc, TSN, p. 10, Feb. 12, 1982)

(2) Bel-Air Village was owned and developed into a residential

subdivision in the 1950s by Makati Development Corporation
(hereinafter referred to as MDC), which in 1968 was merged with
appellant Ayala Corporation.

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 (3) Appellees-spouses Sangalang reside at No. 110 Jupiter Street
between Makati Avenue and Reposo Street; appellees-spouses Gaston
reside at No. 64 Jupiter Street between Makati Avenue and Zodiac
Street; appellees-spouses Briones reside at No. 66 Jupiter Street also
between Makati Avenue and Zodiac Street; while appellee Bel-Air
Village Association, Inc. (hereinafter referred to as BAVA) is the
homeowners' association in Bel-Air Village which takes care of the
sanitation, security, traffic regulations and general welfare of the
village.

(4) The lots which were acquired by appellees Sangalang and

spouse Gaston and spouse and Briones and spouse in 1960, 1957 and
1958, respectively, were all sold by MDC subject to certain conditions
and easements contained in Deed Restrictions which formed a part of
each deed of sale. The pertinent provisions in said Deed Restrictions,
which are common to all lot owners in Bel-Air Village, are as follows:

"I — BEL-AIR ASSOCIATION

The owner of this lot/s or his successors in interest is

required to be and is automatically a member of the Bel-Air
Association and must abide by such rules and regulations laid
down by the Association in the interest of the sanitation, security
and the general welfare of the community.

"The association will also provide for and collect

assessments, which will constitute as a lien on the property
junior only to liens of the government for taxes and to voluntary
mortgages for sufficient consideration entered into in good faith.

"II — USE OF LOTS

"Subject to such amendments and additional restrictions,

reservations, servitudes, etc., as the Bel-Air Association may
from time to time adopt and prescribe, this lot is subject to the
following restrictions:

"a. This lot/s shall not be subdivided. However, three or

more lots may be consolidated and subdivided into a lesser
number of lots provided that none of the resulting lots be smaller
in area than the smallest lot before the consolidation and that
the consolidation and subdivision plan be duly approved by the
governing body of the Bel-Air Association.
"b. This lot/s shall only be used for residential purposes.

"c. Only one single family house may be constructed on a

single lot, although separate servants' quarters or garage may be
built.

"d. Commercial or advertising signs shall not be placed,

constructed, or erected on this lot. Name plates and professional
signs of homeowners are permitted so long as they do not
exceed 80 x 40 centimeters in size.

"e. No cattle, pigs, sheep, goats, ducks, geese, roosters or

rabbits shall be maintained in the lot, except that pets may be
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 maintained but must be controlled in accordance with the rulings
of the Association. The term "pets" includes chickens not in
commercial quantities.
"f. The property is subject to an easement of two (2)
meters within the lot and adjacent to the rear and sides thereof
not fronting a street for the purpose of drainage, sewage, water
and other public facilities as may be necessary and desirable;
and the owner, lessee or his representative shall permit access
thereto by authorized representatives of the Bel-Air Association
or public utility entities for the purposes for which the easement
is created.

"g. This lot shall not be used for any immoral or illegal
trade or activity.

"h. The owner and/or lessee of this lot/s shall at all times
keep the grass cut and trimmed to reduce the fire hazard of the
property.
xxx xxx xxx
"VI — TERM OF RESTRICTIONS

"The foregoing restrictions shall remain in force for fifty

years from January 15, 1957, unless sooner cancelled in its
entirety by two thirds vote of members in good standing of the
Bel-Air Association. However, the Association may, from time to
time, add new ones, amend or abolish particular restrictions or
parts thereof by majority rule.
"VII — ENFORCEMENT OF RESTRICTIONS

"The foregoing restrictions may be enjoined and/or

enforced by court action by the Bel-Air Association, or by the
Makati Development Corporation or its assigns, or by any
registered owner of land within the boundaries of the Bel-Air
Subdivision (Sub-division plan PSD-49226 and Lot 7-B, Psd-
47848) or by any member in good standing of the Bel-Air
association." (Exh. 1-b; Exh. 22, Annex "B"). (Appellant's Brief,
pp. 4-6)
(5) When MDC sold the above-mentioned lots to appellees'
predecessors-in-interest, the whole stretch of the commercial block
between Buendia Avenue and Jupiter Street, from Reposo Street in the
west to Zodiac Street in the east, was still undeveloped. Access,
therefore, to Bel-Air Village was opened to all kinds of people and even
animals. So in 1966, although it was not part of the original plan, MDC
constructed a fence or wall on the commercial block along Jupiter
Street. In 1970, the fence or wall was partly destroyed by typhoon
"Yoling." The destroyed portions were subsequently rebuilt by the
appellant. (Copuyoc, TSN, pp. 31-34, Feb. 12, 1982). When Jupiter
Street was widened in 1972 by 3.5 meters, the fence or wall had to be
destroyed. Upon request of BAVA, the wall was rebuilt inside the
boundary of the commercial block. (Copuyoc, TSN, pp. 44-47, Feb. 12,
1982).
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 (6) When the appellant finally decided to subdivide and sell the
lots in the commercial block between Buendia and Jupiter, BAVA wrote
the appellant on May 9, 1972, requesting for confirmation on the use of
the commercial lots. The appellant replied on May 16, 1972, informing
BAVA of the restrictions intended to be imposed in the sale and use of
the lots. Among these restrictions are: that the building shall have a
set back of 19 meters; and that with respect to vehicular traffic —
along Buendia Avenue, entrance only will be allowed, and along Jupiter
Street and side streets, both entrance and exit will be allowed.

(7) On June 30, 1972, appellant informed BAVA that in a few

months it shall subdivide and sell the commercial lots bordering the
north side of Buendia Avenue Extension from Reposo Street up to
Zodiac Street. Appellant also informed BAVA that it had taken all
precautions and will impose upon the commercial lot owners deed
restrictions which will harmonize and blend with the development and
welfare of Bel-Air Village. Appellant further applied for special
membership in BAVA of the commercial lot owners. A copy of the deed
restrictions for the commercial lots was also enclosed. The proposed
deed restrictions shall include the 19 meter set back of buildings from
Jupiter Street, the requirement for parking space within the lot of one
(1) parking slot for every seventy five (75) meters of office space in the
building and the limitation of vehicular traffic along Buendia to
entrance only, but allowing both vehicular entrance and vehicular exit
through Jupiter Street and any side street.
In its letter of July 10, 1972, BAVA acknowledged the above letter
of appellant and informed the latter that the application for special
membership of the commercial lot owners in BAVA would be submitted
to BAVA's board of governors for decision.

(8) On September 25, 1972, appellant notified BAVA that, after a

careful study, it was finally decided that the height limitation of
buildings on the commercial lots shall be increased from 12.5 meters
to 15 meters. Appellant further informed BAVA that Jupiter Street shall
be widened by 3.5 meters to improve traffic flow in said street. BAVA
did not reply to said letter, but on January 22, 1973, BAVA wrote a
letter to the appellant informing the latter that the Association had
assessed the appellant, as special member of the association, the
amount of P40,795.00 (based on 81,590 square meters at P.50 per
square meter) representing the membership dues to the commercial
lot owners for the year 1973, and requested the appellant to remit the
amount which its board of governors had already included in its current
budget. In reply, appellant on January 31, 1973 informed BAVA that
due to the widening of Jupiter Street, the area of the lots which were
accepted by the Association as members was reduced to 76,726
square meters. Thus, the corresponding dues at P.50 per square meter
should be reduced to P38,363.00. This amount, therefore, was remitted
by the appellant to BAVA. Since then, the latter has been collecting
membership dues from the owners of the commercial lots as special
members of the Association. As a matter of fact, the dues were
increased several times. In 1980, the commercial lot owners were
already being charged dues at the rate of P3.00 per square meter.
(Domingo, TSN, p. 36, March 19, 1980). At this rate, the total
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 membership dues of the commercial lot owners amount to
P230,178.00 annually based on the total area of 76,726 square meters
of the commercial lots.
(9) Meantime, on April 4, 1975, the municipal council of Makati
enacted its ordinance No. 81, providing for the zonification of Makati
(Exh. 18). Under this Ordinance, Bel-Air Village was classified as a Class
A Residential Zone, with its boundary in the south extending to the
center line of Jupiter Street (Exh. 18-A).

Thus, Chapter III, Article I, Section 3.03, par. F. of the Ordinance

provides:
"F. Bel-Air Village area, as bounded on the N by Polaris and
Mercedes streets and on the NE by Estrella Street; on the SE by
Epifanio de los Santos Avenue and on the SW by the center line
of Jupiter Street. Then bounded on the N by the abandoned MRR
Pasig Line; on the E by Makati Avenue; on the S by the center
line of Jupiter Street and on the W by the center line of Reposo
Street." (Exh. 18-A)
Similarly, the Buendia Avenue Extension area was classified as
Administrative Office Zone with its boundary in the North-North East
Extending also up to the center line of Jupiter Street (Exh. 18-b).
Thus, Chapter III, Article I, Section 3.05, par. C. of the Ordinance
provides:
"C. The Buendia Avenue Extension areas, as bounded on
the N-NE by the center line of Jupiter Street, on the SE by
Epifanio de los Santos Avenue; on the SW by Buendia Avenue
and on the NW by the center line of Reposo Street, then on the
N-E by Malugay Street; on the SE by Buendia Avenue and on the
W by Ayala Avenue Extension." (Exh. 18-B)
The Residential Zone and the Administrative Office Zone,
therefore, have a common boundary along the center line of Jupiter
Street.
The above zoning under Ordinance No. 81 of Makati was later
followed under the Comprehensive Zoning Ordinance for the National
Capital Region adopted by the Metro Manila Commission as Ordinance
81-01 on March 14, 1981 (Exh. 19). However, under this ordinance,
Bel-Air Village is simply bounded in the South-Southeast by Jupiter
Street — not anymore up to the center line of Jupiter Street (Exh. B).
Likewise, the block-deep strip along the northwest side of Buendia
Avenue Extension from Reposo to EDSA was classified as a High
Intensity Commercial Zone (Exh. 19-c).
Thus, the Zoning District Boundaries — Makati, in Annex B of the
Ordinance provides:
"R-1 — Low Intensity Residential.
xxx xxx xxx
"4. Bel-Air 1, 3, 4
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 Bounded on the North — J.P. Rizal and Amapola St.

South — Rockwell
Northwest — P. Burgos
Southeast — Jupiter
Southwest — Epifanio de los Santos Ave. (EDSA).
5. Bel-Air 2

Bounded on the Northwest — J.P. Rizal

Southwest — Makati Avenue
South — Jupiter
Southeast — Pasig Line

East — South Avenue" (Exh. 19-b)

xxx xxx xxx
"C-3 — High Intensity Commercial Zone.
"2. A block deep strip along the northwest side of Buendia
Ave. Ext. from Reposo to EDSA." (Exh. 19-c)
Under the above zoning classifications, Jupiter Street, therefore,
is a common boundary of Bel-Air Village and the commercial zone.
(10) Meanwhile, in 1972, BAVA had installed gates at strategic
locations across Jupiter Street which were manned and operated by its
own security guards who were employed to maintain, supervise and
enforce traffic regulations in the roads and streets of the village.
(Villavicencio, TSN, pp. 22-25, Oct. 30, 1980; BAVA Petition, par. 11,
Exh. 17).
Then, on January 17, 1977, the Office of the Mayor of Makati
wrote BAVA directing that, in the interest of public welfare and for the
purpose of easing traffic congestion, the following streets in Bel-Air
Village should be opened for public use:
Amapola Street — from Estrella Street to Mercedes Street
Amapola Street — junction of Palma Street gate going to J.
Villena Street
Mercedes Street — from EDSA to Imelda Avenue and
Amapola junction
Zodiac Street — from Mercedes Street to Buendia Avenue

Jupiter Street — from Zodiac Street to Reposo Street

connecting Metropolitan Avenue to Pasong Tamo and V. Cruz
Extension intersection
Neptune Street — from Makati Avenue to Reposo Street
Orbit Street — from F. Zobel — Candelaria intersection —
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 to Jupiter Street Paseo de Roxas — from Mercedes Street to
Buendia Avenue (Exh. 17, Annex A, BAVA Petition)
On February 10, 1977, BAVA wrote the Mayor of Makati,
expressing the concern of the residents about the opening of the
streets to the general public, and requesting specifically the indefinite
postponement of the plan to open Jupiter Street to public vehicles.
(Exh. 17, Annex B, BAVA Petition).
However, BAVA voluntarily opened to the public Amapola,
Mercedes, Zodiac, Neptune and Paseo de Roxas streets. (Exh. 17-A,
Answer of Makati par. 3-7).
Later, on June 17, 1977, the Barangay Captain of Bel-Air Village
was advised by the Office of the Mayor that, in accordance with the
agreement entered into during the meeting on January 28, 1977, the
Municipal Engineer and the Station Commander of the Makati Police
were ordered to open for public use Jupiter Street from Makati Avenue
to Reposo Street. Accordingly, he was requested to advise the village
residents of the necessity of the opening of the street in the interest of
public welfare. (Exh. 17, Annex E, BAVA Petition)
Then, on June 10, 1977, the Municipal Engineer of Makati in a
letter addressed to BAVA advised the latter to open for vehicular and
pedestrian traffic the entire portion of Jupiter Street from Makati
Avenue to Reposo Street (Exh. 17, BAVA Petition, par. 14).
Finally, on August 12, 1977, the municipal officials of Makati
concerned allegedly opened, destroyed and removed the gates
constructed/located at the corner of Reposo Street and Jupiter Street as
well as the gates/fences located/constructed at Jupiter Street and
Makati Avenue forcibly, and then opened the entire length of Jupiter
Street to public traffic. (Exh. 17, BAVA Petition, pars. 16 and 17)
(11) Before the gates were removed, there was no parking
problem or traffic problem in Jupiter Street, because Jupiter Street was
not allowed to be used by the general public (Villavicencio, TSN, pp.
24-25, Oct. 30, 1930). However, with the opening of Zodiac Street from
Estrella Street to Jupiter Street and also the opening to the public of the
entire length of Jupiter Street, there was a tremendous increase in the
volume of traffic passing along Jupiter Street coming from EDSA to
Estrella Street, then to Zodiac Street to Jupiter Street, and along the
entire length of Jupiter Street to its other end at Reposo Street.
(Villavicencio, TSN, pp. 30-32, Oct. 30, 1980)
In the meantime, the purchasers of the commercial lots between
Jupiter Street and Buendia Avenue extension had started constructing
their respective buildings in 1974-1975. They demolished the portions
of the fence or wall standing within the boundary of their lots. Many of
the owners constructed their own fences or walls in lieu of the wall and
they employed their own security guards. (TSN, p. 83, Feb. 20, 1931;
TSN, pp. 53-54; 72-74, March 20, 1981; TSN, pp. 54-55, July 23, 1981)

(12) Then, on January 27, 1978, appellant donated the entire

Jupiter Street from Metropolitan Avenue to Zodiac Street to BAVA (Exh.
7). However, even before 1978, the Makati Police and the security force
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 of BAVA were already the ones regulating the traffic along Jupiter
Street after the gates were opened in 1977. (Sancianco, TSN, pp. 26-
30, Oct. 2, 1981)

In October, 1979, the fence at the corner of Orbit and Neptune

Streets was opened and removed (BAVA Petition, par. 22, Exh. 17). The
opening of the whole stretch of Orbit Street from J.P. Rizal Avenue up to
Imelda Avenue and later to Jupiter Street was agreed to at the
conference attended by the President of BAVA in the office of the
Station Commander of Makati, subject to certain conditions, to wit:
"That, maintenance of Orbit St. up to Jupiter St. shall be
shouldered by the Municipality of Makati.
"That, street lights will be installed and maintenance of the
same along Orbit St. from J.P. Rizal Ave. up to Jupiter St. shall be
undertaken by the Municipality.
"That for the security of the residents of San Miguel Village
and Bel-Air Village, as a result of the opening of Orbit Street,
police outposts shall be constructed by the Municipality of Makati
to be headed by personnel of Station No. 4, in close coordination
with the Security Guards of San Miguel Village and Bel-Air
Village." (CF. Exh. 3 to Counter-Affidavit, of Station Commander,
Ruperto Acle. p. 253, records)" (Order, Civil Case No. 34948, Exh.
17-c)
(13) Thus, with the opening of the entire length of Jupiter Street
to public traffic, the different residential lots located in the northern
side of Jupiter Street ceased to be used for purely residential purposes.
They became, for all purposes, commercial in character.

(14) Subsequently, on October 29, 1979, the plaintiffs-appellees

Jose D. Sangalang and Lutgarda D. Sangalang brought the present
action for damages against the defendant-appellant Ayala Corporation
predicated on both breach of contract and on tort or quasi-delict. A
supplemental complaint was later filed by said appellees seeking to
augment the reliefs prayed for in the original complaint because of
alleged supervening events which occurred during the trial of the case.
Claiming to be similarly situated as the plaintiffs-appellees, the spouses
Felix C. Gaston and Dolores R. Gaston, Jose V. Briones and Alicia R.
Briones, and the homeowners' association (BAVA) intervened in the
case.
(15) After trial on the merits, the then Court of First Instance of
Rizal, Pasig, Metro Manila, rendered a decision in favor of the appellees
the dispositive portion of which is as follows:
"WHEREFORE, judgment is hereby accordingly rendered as
follows:

ON PLAINTIFFS' COMPLAINT:
Defendant is ordered to pay to the plaintiffs-spouses
Sangalang the following damages:
1. The sum of P500,000.00 as actual and consequential
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 damages;
2. The sum of P2,000,000.00 as moral damages;
3. The sum of P500,000.00 as exemplary damages;
4. The sum of P100,000.00 as attorney's fees; and

5. The costs of suit.

ON INTERVENORS FELIX and DOLORES GASTON'S COMPLAINT:
Defendant is ordered to pay to the spouses Felix and
Dolores Gaston, the following damages:
1. The sum of P400,000.00 as consequential damages;
2. The sum of P500,000.00 as moral damages;
3. The sum of P500,000.00 as exemplary damages:

4. The sum of P50,000.00 as attorney's fees; and

5. The costs of suit.
ON INTERVENORS JOSE and ALICIA BRIONES' COMPLAINT:
Defendant is ordered to pay to the spouses Jose and Alicia
Briones, the following damages:
1. The sum of P400,000.00 as consequential damages;
2. The sum of P500,000.00 as moral damages;

3. The sum of P500,000.00 as exemplary damages;

4. The sum of P50,000.00 as attorney's fees; and
5. The costs of suit.
ON INTERVENOR BAVA'S COMPLAINT:

Defendant is ordered to pay intervenor BAVA, the following

damages:
1. The sum of P400,000.00 as consequential damages;

2. The sum of P500,000.00 as exemplary damages

3. The sum of P50,000.00 as attorney's fees; and
4. The costs of suit.
The above damages awarded to the plaintiffs and
intervenors shall bear legal interest from the filing of the
complaint.
Defendant is further ordered to restore/reconstruct the perimeter
wall at its original position in 1966 from Reposo Street in the
west to Zodiac Street in the east, at its own expense, within SIX
(6) MONTHS from finality of judgment.
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 SO ORDERED."
(Record on Appeal, pp. 400-401) 2
xxx xxx xxx
On appeal, the Court of Appeals 3 rendered a reversal, and disposed as
follows:
ACCORDINGLY, finding the decision appealed from as not
supported by the facts and the law on the matter, the same is hereby
SET ASIDE and another one entered dismissing the case for lack of a
cause of action. Without pronouncement as to costs.
SO ORDERED. 4

II. G.R. No. 74376

This petition was similarly brought by BAVA to enforce the aforesaid
restrictions stipulated in the deeds of sale executed by the Ayala
Corporation. The petitioner originally brought the complaint in the Regional
Trial Court of Makati, 5 "principally for specific performance, plaintiff [now,
petitioner] alleging that the defendant [now, private respondent] Tenorio
allowed defendant [Tenorio's co-private respondent] Gonzalves to occupy
and convert the house at 60 Jupiter Street, Bel-Air Village, Makati, Metro
Manila, into a restaurant, without its knowledge and consent, and in violation
of the deed restrictions which provide that the lot and building thereon must
be used only for residential purposes upon which the prayed-for main relief
was for 'the defendants to permanently refrain from using the premises as
commercial and to comply with the terms of the Deed Restrictions.'" 6 The
trial court dismissed the complaint on a procedural ground, i.e., pendency of
an identical action, Civil Case No. 32346, entitled "Bel-Air Village Association,
Inc. v. Jesus Tenorio." The Court of Appeals 7 affirmed, and held, in addition,
that Jupiter Street "is classified as High density commercial (C-3) zone as per
Comprehensive Zoning Ordinance No. 81-01 for National Capital Region," 8
following its own ruling in AC-G.R. No. 66649, entitled "Bel-Air Village
Association, Inc. vs. Hy-Land Realty & Development Corporation, et al."
III. G.R. No. 76394
xxx xxx xxx

Defendants-spouses Eduardo V. Romualdez, Jr. and Buena

Tioseco are the owners of a house and lot located at 108 Jupiter St.,
Makati, Metro Manila as evidenced by Transfer Certificate of Title No.
332394 of the Registry of Deeds of Rizal. The fact is undisputed that at
the time the defendants acquired the subject house and lot, several
restrictions were already annotated on the reverse side of their title;
however, for purposes of this appeal we shall quote hereunder only the
pertinent ones, to wit:

"(b) This lot/s shall be used only for residential purposes."

xxx xxx xxx

"IV. Term of Restriction.

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 The foregoing restriction(s) shall remain in force for fifty
years from January 15, 1957, unless sooner cancelled in its
entirety by two-thirds vote of the members in good standing of
the Bel-Air Association. However, the Association may from time
to time, add new ones, amend or abolish particular restrictions or
parts thereof by majority rule."

During the early part of 1979, plaintiff noted that certain

renovations and constructions were being made by the defendants on
the subject premises, for which reason the defendants were advised to
inform the plaintiff of the kind of construction that was going on.
Because the defendants failed to comply with the request of the
plaintiff, the latter's chief security officer visited the subject premises
on March 23, 1979 and found out that the defendants were putting up
a bake and coffee shop, which fact was confirmed by defendant Mrs.
Romualdez herself. Thereafter, the plaintiff reminded defendants that
they were violating the deed restriction. Despite said reminder, the
defendants proceeded with the construction of the bake shop.
Consequently, plaintiff sent defendants a letter dated April 30, 1979
warning them that if they will not desist from using the premises in
question for commercial purposes, they will be sued for violations of
the deed restrictions.

Despite the warning, the defendants proceeded with the

construction of their bake shop. 9
xxx xxx xxx
The trial court 10 adjudged in favor of BAVA. On appeal, the Court of
Appeals 11 reversed, on the strength of its holding in AC-G.R No. 66649
earlier referred to.
BAVA then elevated the matter to the Court by a petition for review on
certiorari. The Court 12 initially denied the petition "for lack of merit, it
appearing that the conclusions of the respondent Court of Appeals that
private respondents' bake and coffee shop lies within a commercial zone and
that said private respondents are released from their obligations to maintain
the lot known as 108 Jupiter Street for residential purposes by virtue of
Ordinance No. 81 of the Municipality of Makati and Comprehensive Zoning
Ordinance No. 81-01 of the Metropolitan Manila Commission, are in accord
with law and jurisprudence," 13 for which BAVA sought a reconsideration.
Pending resolution, the case was referred to the Second Division of this
Court, 14 and thereafter, to the Court En Banc en consulta. 15 Per our
Resolution, dated April 29, 1988, we consolidated this case with G.R. Nos.
74376 and 82281. 16
IV. G.R. No. 78182.
xxx xxx xxx
The case stemmed from the leasing by defendant Dolores Filley
of her building and lot situated at No. 205 Reposo Street, Bel-Air Village
Makati, Metro Manila to her co-defendant, the advertising firm J.
Romero and Associates, in alleged violation of deed restrictions which
stipulated that Filley's lot could only be used for residential purposes.
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 Plaintiff sought judgment from the lower court ordering the defendants
to "permanently refrain" from using the premises in question "as
commercial" and to comply with the terms of the deed restrictions.

After the proper proceedings, the court granted the plaintiff the
sought-for relief with the additional imposition of exemplary damages
of P50,000.00 and attorney's fees of P10,000.00. The trial court gave
emphasis to the restrictive clauses contained in Filley's deed of sale
from the plaintiff, which made the conversion of the building into a
commercial one a violation.

Defendants now seek review and reversal on three (3)

assignments of errors, namely:
I.

THE TRIAL COURT ERRED IN NOT FINDING THAT THE

REGULATIONS PROMULGATED BY THE MUNICIPAL AUTHORITIES
IN MAKATI AND THE MINISTRY OF HUMAN SETTLEMENTS
CHANGING THE CHARACTER OF THE AREAS IN QUESTION HAD
RENDERED THE RESTRICTIVE EASEMENT ON THE TITLE OF THE
APPELLANTS VACATED.

II.
THE COURT ERRED IN NOT RULING THAT BECAUSE THE
APPELLEE(S) HAD ALLOWED THE USE OF THE PROPERTY WITHIN
THE VILLAGE FOR NON-RESIDENTIAL PURPOSES, IT IS NOW
ESTOPPED FROM ENFORCING THE RESTRICTIVE PROHIBITIONS
SUBJECT MATTER OF THIS CASE.
III.

THE COURT ERRED IN NOT FINDING THAT THERE EXISTED

A BILATERAL CONTRACT BETWEEN THE PARTIES AND THAT
SINCE APPELLEE HAD NOT PERFORMED ITS OBLIGATIONS UNDER
THIS ARRANGEMENT THE APPELLANT IN TURN WAS UNDER NO
OBLIGATION TO ANNOTATE THE RESTRICTIVE PROHIBITIONS ON
THE BACK OF THE TITLE.

Appellants anchor their appeal on the proposition that the Bel-Air

Village area, contrary to plaintiff-appellee's pretension of being a
strictly residential zone, is in fact commercial and characterize the
restrictions contained in appellant Filley's deed of sale from the
appellee as completely outmoded, which have lost all relevance to the
present-day realities in Makati, now the premier business hub of the
nation, where there is a proliferation of numerous commercial
enterprises established through the years, in fact even within the heart
of so-called "residential" villages. Thus, it may be said that appellants
base their position on the inexorable march of progress which has
rendered at naught the continued efficacy of the restrictions. Appellant
on the other hand, relies on a rigid interpretation of the contractual
stipulations agreed upon with appellant Filley, in effect arguing that the
restrictions are valid ad infinitum.

The lower court quite properly found that other commercial

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 establishments exist in the same area (in fact, on the same street) but
ignored it just the same and said —
"The fact that defendants were able to prove the existence
of several commercial establishments inside the village does not
exempt them from liability for violating some of the restrictions."

evidently choosing to accord primacy to contractual stipulation.

17

xxx xxx xxx

The Court of Appeals 18 overturned the lower court, 19 likewise based
on AC-G.R. No. 66649. The respondent Court observed also that J. Romero &
Associates had been given authority to open a commercial office by the
Human Settlements Regulatory Commission.
V. G.R. No. 82281
The facts of this case have been based on stipulation. We quote:
"COMES NOW, the Parties, assisted by their respective counsel
and to this Honorable Court, respectfully enter into the following
stipulations of facts, to wit:

1. The parties admit the personal circumstances of each other as

well as their capacities to sue and be sued.
2. The parties admit that plaintiff (BAVA for short) is the legally
constituted homeowners' association in Bel-Air Subdivision, Makati,
Metro Manila.

3. The parties admit that defendant Violeta Moncal is the

registered owner of a parcel of land with a residential house
constructed thereon situated at No. 104 Jupiter Street, Bel-Air Village,
Makati, Metro Manila; that as such lot owner, she is a member of the
plaintiff association.

4. The parties admit that defendant Majal Development

Corporation (Majal for short) is the lessee of defendant Moncal's house
and lot located at No. 104 Jupiter Street.
5. The parties admit that a deed restrictions is annotated on the
title of defendant Moncal, which provides, among others, that the lot in
question must be used only for residential purposes;" that at time
Moncal purchased her aforesaid lot in 1959 said deed restrictions was
already annotated in the said title.
6. The parties admit that when Moncal leased her subject
property to Majal, she did not secure the consent of BAVA to lease the
said house and lot to the present lessee.

7. The parties admit that along Jupiter Street and on the same
side where Moncal's property is located, there are restaurants, clinics,
placement or employment agencies and other commercial or business
establishments. These establishments, however, were sued by BAVA in
the proper court.

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 8. The parties admit that at the time Moncal purchased the
subject property from the Makati Development Corporation, there was
a perimeter wall, running along Jupiter Street, which wall was
constructed by the subdivision owner; that at that time the gates of the
entrances to Jupiter Street were closed to public traffic. In short, the
entire length of Jupiter which was inside the perimeter wall was not
then open to public traffic.
9. The parties admit that subsequent thereto, Ayala tore down
the perimeter wall to give way to the commercial building fronting
Buendia Avenue (now Gil J. Puyat Avenue).
10. The parties admit that on August 12, 1977, the Mayor of
Makati forcibly opened and removed the street gates constructed on
Jupiter Street and Reposo Street, thereby opening said streets to the
public.

11. The parties admit plaintiffs letters of October 10, 23 and 31,
1984; as well as defendants' letters-reply dated October 17 and 29,
1984. 20

xxx xxx xxx

The trial court 21 dismissed the petitioner's complaint, which dismissal
was affirmed on appeal. 22 According to the appellate court, the opening of
Jupiter Street to human and vehicular traffic, and the commercialization of
the Municipality of Makati in general, were circumstances that had made
compliance by Moncal with the aforesaid "deed restrictions" "extremely
difficult and unreasonable," 23 a development that had excused compliance
altogether under Article 1267 of the Civil Code.
VI. The cases before the Court; the Court's decision.
In brief, G.R. Nos. 74376, 76394, 78182, and 82281 are efforts to
enforce the "deed restrictions" in question against specific residents (private
respondents in the petitions) of Jupiter Street and with respect to G.R. No.
78182, Reposo Street. The private respondents are alleged to have
converted their residences into commercial establishments (a restaurant in
G.R. No. 74376, a bakery and coffee shop in G.R. No. 76394, an advertising
firm in G.R. No. 78182; and a construction company, apparently, in G.R. No.
82281) in violation of the said restrictions. 24
Their mother case, G. R. No. 71169 is, on the other hand, a petition to
hold the vendor itself, Ayala Corporation (formerly Makati Development
Corporation), liable for tearing down the perimeter wall along Jupiter Street
that had theretofore closed its commercial section from the residences of
Bel-Air Village and ushering in, as a consequence, the full
"commercialization" of Jupiter Street, in violation of the very restrictions it
had authored.
As We indicated, the Court of Appeals dismissed all five appeals on the
basis primarily of its ruling in AC-G.R. No. 66649, "Bel-Air Village, Inc. v. Hy-
Land Realty Development Corporation, et al.," in which the appellate court
explicitly rejected claims under the same "deed restrictions" as a result of
Ordinance No. 81 enacted by the Government of the Municipality of Makati,
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 as well as Comprehensive Zoning Ordinance No. 8101 promulgated by the
Metropolitan Manila Commission, which two ordinances allegedly allowed the
use of Jupiter Street both for residential and commercial purposes. It was
likewise held that these twin measures were valid as a legitimate exercise of
police power.
The Court of Appeals' reliance on Ordinance Nos. 81 and 8101 is now
assailed in these petitions, particularly the Sangalang, et al. petition.
Aside from this fundamental issue, the petitioners likewise raise
procedural questions. G.R. No. 71169, the mother case, begins with one.
1. G.R. No. 71169
In this petition, the following questions are specifically put to the Court:
May the Honorable Intermediate Appellate Court reverse the
decision of the trial court on issues which were neither raised by AYALA
in its Answers either to the Complaint or Supplemental Complaint nor
specifically assigned as one of the alleged errors on appeal? 25
May the Honorable Intermediate Appellate Court arbitrarily
ignore the decisive findings of fact of the trial court, even if
uncontradicted and/or documented, and premised mainly on its own
unsupported conclusions totally reverse the trial court's decision? 26
May the Honorable Intermediate Appellate Court disregard the
trial court's documented findings that respondent Ayala for its own
self-interest and commercial purposes contrived in bad faith to do
away with the Jupiter Street perimeter wall it put up three times which
wall was really intended to separate the residential from the
commercial areas and thereby insure the privacy and security of Bel-
Air Village pursuant to respondent Ayala's express continuing
representation and/or covenant to do so? 27

a.
The first question represents an attack on the appellate court's
reliance on Ordinances Nos. 81 and 81-01, a matter not supposedly taken up
at the trial or assigned as an error on appeal. As a rule, the Court of Appeals
(then the Intermediate Appellate Court) may determine only such questions
as have been properly raised to it, yet, this is not an inflexible rule of
procedure. In Hernandez v. Andal, 28 it was stated that "an unassigned error
closely related to an error properly assigned, or upon which the
determination of the question raised by the error properly assigned is
dependent, will be considered by the appellate court notwithstanding the
failure to assign it as error." 29 In Baquiran v. Court of Appeals, 30 we
referred to the "modern trend of procedure . . . accord[ing] the courts broad
discretionary power," 31 and in which we allowed consideration of matters
"having some bearing on the issue submitted which the parties failed to
raise or the lower court ignore[d]." 32 And in Vda. de Javellana v. Court of
Appeals, 33 we permitted the consideration of a "patent error" of the trial
court by the Court of Appeals under Section 7, of Rule 51, of the Rules of
Court, 34 although such an error had not been raised in the brief.
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 But what we note is the fact that the Ayala Corporation did raise the
zoning measures as affirmative defenses, first in its answer 35 and second, in
its brief, 36 and submitted at the trial as exhibits. 37 There is accordingly no
cause for complaint on the part of the petitioners for Ayala's violation of the
Rules.
But while there was reason for the consideration, on appeal, of the said
zoning ordinances in question, this Court nevertheless finds as inaccurate
the Court of Appeals' holding that such measures, had "in effect, [made]
Jupiter Street .. a street which could be used not only for residential
purposes," 38 and that "[i]t lost its character as a street for the exclusive
benefit of those residing in Bel-Air Village completely." 39
Among other things, there is a recognition under both Ordinances Nos.
81 and 81-01 that Jupiter Street lies as the boundary between Bel-Air Village
and Ayala Corporation's commercial section. And since 1957, it had been
considered as a boundary — not as a part of either the residential or
commercial zones of Ayala Corporation's real estate development projects.
Thus, the Bel-Air Village Association's articles of incorporation state that Bel-
Air Village is "bounded on the NE., from Amapola St., to de los Santos Ave.,
by Estrella St., on the SE., from Estrella St., to Pedestrian Lane, by E. De los
Santos Ave., on the SW., from Pedestrian Lane to Reposo St., by Jupiter
Street . . ." 40 Hence, it cannot be said to have been "for the exclusive
benefit" of Bel-Air Village residents.

We come to the perimeter wall then standing on the commercial side of

Jupiter Street the destruction of which opened the street to the public. The
petitioners contend that the opening of the thoroughfare had opened, in
turn, the floodgates to the commercialization of Bel-Air Village. The wall, so
they allege, was designed precisely to protect the peace and privacy of Bel-
Air Village residents from the din and uproar of mercantile pursuits, and that
the Ayala Corporation had committed itself to maintain it. It was the opinion
of the Court of Appeals, as we said, that Ayala's liability therefor, if one
existed, had been overtaken by the passage of Ordinances Nos. 81 and 82-
01, opening Jupiter Street to commerce.
It is our ruling, we reiterate, that Jupiter Street lies as a mere
boundary, a fact acknowledged by the authorities of Makati and the National
Government and, as a scrutiny of the records themselves reveals, by the
petitioners themselves, as the articles of incorporation of Bel-Air Village
Association itself would confirm. As a consequence, Jupiter Street was
intended for the use by both the commercial and residential blocks. It was
not originally constructed, therefore, for the exclusive use of either block,
least of all the residents of Bel-Air Village, but, we repeat, in favor of both, as
distinguished from the general public.
When the wall was erected in 1966 and rebuilt twice, in 1970 and
1972, it was not for the purpose of physically separating the two blocks.
According to Ayala Corporation, it was put up to enable the Bel-Air Village
Association "better control of the security in the area" 41 and as the Ayala
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 Corporation's "show of goodwill," 42 a view we find acceptable in the
premises. For it cannot be denied that at that time, the commercial area was
vacant, "open for [sic] animals and people to have access to Bel-Air Village."
43 There was hence a necessity for a wall.

In any case, we find the petitioners' theory, that maintaining the wall
was a matter of a contractual obligation on the part of Ayala, to be pure
conjecture. The records do not establish the existence of such a purported
commitment. For one, the subdivision plans submitted did not mention
anything about it. For another, there is nothing in the "deed restrictions" that
would point to any covenant regarding the construction of a wall. There is no
representation or promise whatsoever therein to that effect.
With the construction of the commercial buildings in 1974, the reason
for which the wall was built — to secure Bel-Air Village from interlopers —
had naturally ceased to exist. The buildings themselves had provided
formidable curtains of security for the residents. It should be noted that the
commercial lot buyers themselves were forced to demolish parts of the wall
to gain access to Jupiter Street, which they had after all equal right to use.
In fine, we cannot hold the Ayala Corporation liable for damages for a
commitment it did not make, much less for alleged resort to machinations in
evading it. The records, on the contrary, will show that the Bel-Air Village
Association had been informed, at the very outset, about the impending use
of Jupiter Street by commercial lot buyers. We quote:
xxx xxx xxx
1. Exh. I of appellee, the memorandum of Mr. Carmelo Caluag,
President of BAVA, dated May 10, 1972, informing the BAVA Board of
Governors and Barrio Council members about the future use of Jupiter
Street by the lot owners fronting Buendia Avenue. The use of Jupiter
Street by the owners of the commercial lots would necessarily require
the demolition of the wall along the commercial block adjoining Jupiter
Street.

2. Exh. J of appellee, the minutes of the joint meeting of BAVA

Board of Governors and the Bel-Air Barrio Council where the matter
that "Buendia lot owners will have equal rights to use Jupiter Street,"
and that Ayala's "plans about the sale of lots and use of Jupiter Street"
were precisely taken up. This confirms that from the start BAVA was
informed that the commercial lot owners will use Jupiter Street and
that necessarily the wall along Jupiter Street would be demolished.

3. Exh. 10, the letter of Mr. Demetrio Copuyoc to the President of

BAVA, dated May 16, 1972, expressly stating that vehicular entrance
and exit to the commercial lots would be allowed along Jupiter and side
streets.

4. Exhs. 27, 27-A, 27-B, the letter of Atty. Salvador J. Lorayes,

dated June 30, 1972, with enclosed copy of proposed restriction for the
commercial lots to BAVA. The proposed restriction again expressly
stated that "Vehicular entrances and exits are allowed thru Jupiter and
any side streets.
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 5. Exh. L of appellee, the minutes of the meeting of the members
of BAVA, dated August 26, 1972, where it is stated "Recently, Ayala
Corporation informed the Board that the lots fronting Buendia Avenue
will soon be offered for sale, and that future lot owners will be given
equal rights to use Jupiter Street as well as members of the Association.

6. Exh. 25, the letter of Atty. Lorayes, dated September 25, 1972,
informing BAVA of the widening of Jupiter Street by 3.5 meters to
improve traffic flow in said street to benefit both the residents of Bel-
Air and the future owners of the commercial lots. 44

The petitioners cannot successfully rely on the alleged promise by

Demetrio Copuyoc, Ayala's manager, to build a "[f]ence along Jupiter with
gate for entrance and/or exit" 45 as evidence of Ayala's alleged continuing
obligation to maintain a wall between the residential and commercial
sections. It should be observed that the fence referred to included a "gate
for entrance and or exit" which would have defeated the purpose of a wall, in
the sense the petitioners would put in one, that is to say, an impenetrable
barrier. But as Ayala would point out subsequently, the proposed fence was
not constructed because it had become unnecessary when the commercial
lot owners commenced constructions thereon.
Be that as it may, the Court cannot visualize any purported obligation
by Ayala Corporation to keep the wall on the strength of this supposed
promise alone. If truly Ayala promised anything — assuming that Capuyoc
was authorized to bind the corporation with a promise — it would have been
with respect to the fence. It would not have established the preexisting
obligation alleged with respect to the wall.
Obligations arise, among other things, from contract. 46 If Ayala, then,
were bound by an obligation, it would have been pursuant to a contract. A
contract, however, is characterized by a "meeting of minds between two
persons. 47 As a consensual relation, it must be shown to exist as a fact,
clearly and convincingly. But it cannot be inferred from a mishmash of
circumstances alone disclosing some kind of an "understanding," when
especially, those disparate circumstances are not themselves incompatible
with contentions that no accord had existed or had been reached. 48
The petitioners cannot simply assume that the wall was there for the
purpose with which they now give it, by the bare coincidence that it had
divided the residential block from the commercial section of Bel-Air. The
burden of proof rests with them to show that it had indeed been built
precisely for that objective, a proof that must satisfy the requirements of our
rules of evidence. It cannot be made to stand on the strength of plain
inferences.
b.
This likewise answers the petitioners' second query, whether or not the
Court of Appeals had "arbitrarily ignore[d] the decisive findings of the trial
court," 49 i.e., findings pointing to alleged acts performed by the Ayala
Corporation proving its commitment to maintain the wall abovesaid.
Specifically, the petitioners refer to, among other things: (1) Ayala's alleged
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 announcement to Bel-Air Village Association members that "[t]he perimeter
wall along Jupiter Street will not be demolished;" 50 (2) Ayala's alleged
commitment "during the pendency of the case in the trial court" to restore
the wall; (3) alleged assurances by Copuyoc that the wall will not be
removed; (4) alleged contrivances by the corporation to make the
association admit as members the commercial lot buyers which provided
them equal access to Jupiter Street; and (5) Ayala's donation to the
association of Jupiter Street for "private use" of Bel-Air residents. 51
As we stated, the Ayala Corporation's alleged conduct prior to or during
the proceedings below are not necessarily at war with claims that no
commitment had been in fact made.
With respect to Ayala's alleged announcement before the association,
the Court does not agree that Ayala had categorically assumed as an
obligation to maintain the wall "perpetually," i.e., until the year 2007 (the
expiration date under the "deed restrictions.") There is nothing in its
statement that would bare any commitment. In connection with the
conference between the parties "during the pendency" of the trial, it is to be
noted that the Ayala Corporation denies having warranted the restoration of
the said wall therein. What, on the other hand, appears in the records is the
fact that Ayala did make that promise, but provided that the Mayor allowed
it. It turned out, however, that the Mayor balked at the idea. 52 But assuming
that Ayala did promise to rebuild the wall (in that conference), it does not
seem to us that it did consequently promise to maintain it in perpetuity.
It is unfair to say, as the trial court did, that the Ayala had "contrived to
make future commercial lot owners special members of BAVA and thereby
acquire equal right with the regular members thereof to use Jupiter Street,"
53 since, as we stated, the commercial lot buyers have the right, in any

event, to make use of Jupiter Street, whether or not they are members of the
association. It is not their memberships that give them the right to use it.
They share that right with Bel-Air residents from the outset.
The objective of making the commercial lot owners special members of
the Bel-Air Village Association was not to accord them equal access to Jupiter
Street and inferentially, to give them the right to knock down the perimeter
wall. It was, rather, to regulate the use of the street owing precisely to the
"planned" nature of Ayala's development project, and real estate
development in general, and this could best be done by placing the
commercial lot owners under the association's jurisdiction.
Moreover, Ayala's overtures with the association concerning the
membership of commercial lot buyers therein have been shown to be neither
perfidious nor unethical nor devious (paraphrasing the lower court). We
quote anew:
xxx xxx xxx
(7) On June 30, 1972, appellant informed BAVA that in a few
months it shall subdivide and sell the commercial lots bordering the
north side of Buendia Avenue Extension from Reposo Street up to
Zodiac Street. Appellant also informed BAVA that it had taken all
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 precautions and will impose upon the commercial lot owners deed
restrictions which will harmonize and blend with the development and
welfare of Bel-Air Village. Appellant further applied for special
membership in BAVA of the commercial lot owners. A copy of the deed
restrictions for the commercial lots was also enclosed. The proposed
deed restrictions shall include the 19 meter set back of buildings from
Jupiter Street, the requirement for parking space within the lot of one
(1) parking slot for every seventy five (75) meters of office space in the
building and the limitation of vehicular traffic along Buendia to
entrance only, but allowing both vehicular entrance and vehicular exit
through Jupiter Street and any side street.

In its letter of July 10, 1972, BAVA acknowledged the above letter
of appellant and informed the latter that the application for special
membership of the commercial lot owners in BAVA would be submitted
to BAVA's board of governors for decision.
(8) On September 25, 1972, appellant notified BAVA that, after a
careful study, it was finally decided that the height limitation of
buildings on the commercial lots shall be increased from 12.5 meters
to 15 meters. Appellant further informed BAVA that Jupiter Street shall
be widened by 3.5 meters to improve traffic flow in said street. BAVA
did not reply to said letter, but on January 22, 1973, BAVA wrote a
letter to the appellant informing the latter that the Association had
assessed the appellant, as special member of the association, the
amount of P40,795.00 (based on 81,590 square meters at P.50 per
square meter) representing the membership dues of the commercial
lot owners for the year 1973, and requested the appellant to remit the
amount which its board of governors had already included in its current
budget. In reply, appellant on January 31, 1973 informed BAVA that
due to the widening of Jupiter Street, the area of the lots which were
accepted by the Association as members was reduced to 76,726
square meters. Thus, the corresponding due — at P.50 per square
meter should be reduced to P38,363.00. This amount, therefore, was
remitted by the appellant to BAVA. Since then, the latter has been
collecting membership dues from the owners of the commercial lots as
special members of the Association. As a matter of fact, the dues were
increased several times. In 1980, the commercial lot owners were
already being charged dues at the rate of P3.00 per square meter.
(Domingo, TSN, p. 36, March 19, 1980). At this rate, the total
membership dues of the commercial lot owners amount to
P230,178.00 annually based on the total area of 76,726 square meters
of the commercial lots. 54
xxx xxx xxx
The alleged undertaking, finally, by Ayala in the deed of donation (over
Jupiter Street) to leave Jupiter Street for the private use of Bel-Air residents is
belied by the very provisions of the deed. We quote:
xxx xxx xxx
"IV. That the offer made by the DONOR had been accepted by
the DONEE subject to the condition that the property will be used as a
street for the use of the members of the DONEE, their families,
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 personnel, guests, domestic help and, under certain reasonable
conditions and restrictions, by the general public, and in the event that
said lots or parts thereof cease to be used as such, ownership thereof
shall automatically revert to the DONOR. The DONEE shall always have
Reposo Street, Makati Avenue, and Paseo de Roxas open for the use of
the general public. It is also understood that the DONOR shall continue
the maintenance of the street at its expense for a period of three years
from date hereof." (Deed of Donation, p. 6, Exh. 7) 55
xxx xxx xxx
The donation, on the contrary, gave the general public equal right to it.
The Court cannot then say, accepting the veracity of the petitioners'
"facts" enumerated above, that the Ayala Corporation may be held liable for
specific performance of a demandable obligation, let alone damages.
The Court adds that Ayala can hardly be held responsible for the
alleged deterioration of "living and environmental conditions" 56 of the Bel-
Air area, as a consequence of "Ayala's authorized demolition of the Jupiter
perimeter wall in 1974-1975." 57 We agree with Ayala that until 1976, "there
was peace and quiet" at Jupiter Street, as the petitioners' (Sangalang,
Gaston, and Briones) complaints admit. Hence, the degeneration of peace
and order in Bel-Air cannot be ascribed to the destruction of the wall in 1974
and 1975.
What Ayala submits as the real cause was the opening of Jupiter Street
to vehicular traffic in 1977. 58 But this was upon orders of the Mayor, and for
which the homeowners' association had precisely filed suit (Civil Case No.
34998) 59 to contest the act of the Mayor.
c.
This likewise disposes of the third question presented. The petitioners'
reliance on Ayala's alleged conduct (proving its alleged commitment), so we
have ruled, is not well-taken. Ayala's alleged acts do not, by themselves,
reflect a commitment to maintain the wall in dispute. It cannot be therefore
said that the Court of Appeals "arbitrarily ignore[d]" 60 the lower court's
findings. Precisely, it is the duty of the appellate court to review the findings
of the trial judge, be they of fact or law. 61 It is not bound by the conclusions
of the judge, for which reason it makes its own findings and arrives at its own
conclusions. Unless a grave abuse of discretion may be imputed to it, it may
accept or reject the lower tribunal's determinations and rely solely on the
records.
Accordingly, the Court affirms the Court of Appeals' holding that the
Ayala Corporation, in its dealings with the petitioners, the Bel-Air Village
Association in particular, had "acted with justice, gave the appellees
[petitioners] their due and observed honesty and good faith." 62 "Therefore,
under both Articles 19 and 21 of the Civil Code, the appellant [Ayala] cannot
be held liable for damages." 63
2. G.R. Nos. 74376, 76394, 78182, & 82281.
Our decision also resolves, quite anticlimactically, these companion
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 cases. But we do so for various other reasons. In the Sangalang case, we
absolve the Ayala Corporation primarily owing to our finding that it is not
liable for the opening of Jupiter Street to the general public. Insofar as these
petitions are concerned, we likewise exculpate the private respondents, not
only because of the fact that Jupiter Street is not covered by the restrictive
easements based on the "deed restrictions" but chiefly because the National
Government itself, through the Metro Manila Commission (MMC), had
reclassified Jupiter Street into a "high density commercial (C-3) zone," 64
pursuant to its Ordinance No. 81-01. Hence, the petitioners have no cause of
action on the strength alone of the said "deed restrictions."
In view thereof, we find no need in resolving the questions raised as to
procedure, since this disposition is sufficient to resolve these cases.
It is not that we are saying that restrictive easements, especially the
easements herein in question, are invalid or ineffective. As far as the Bel-Air
subdivision itself is concerned, certainly, they are valid and enforceable. But
they are, like all contracts, subject to the overriding demands, needs, and
interests of the greater number as the State may determine in the legitimate
exercise of police power. Our jurisdiction guarantees sanctity of contract and
is said to be the "law between the contracting parties," 65 but while it is so, it
cannot contravene "law, morals, good customs, public order, or public
policy." 66 Above all, it cannot be raised as a deterrent to police power,
designed precisely to promote health, safety, peace, and enhance the
common good, at the expense of contractual rights, whenever necessary. In
Ortigas & Co., Limited Partnership v. Feati Bank and Trust Co., 67 we are told:
xxx xxx xxx
2. With regard to the contention that said resolution cannot
nullify the contractual obligations assumed by the defendant-appellee
— referring to the restrictions incorporated in the deeds of sale and
later in the corresponding Transfer Certificates of Title issued to
defendant-appellee — it should be stressed, that while non-impairment
of contracts is constitutionally guaranteed, the rule is not absolute,
since it has to be reconciled with the legitimate exercise of police
power, i.e., "the power to prescribe regulations to promote the health,
morals, peace, education, good order or safety and general welfare of
the people." Invariably described as "the most essential, insistent, and
illimitable of powers" and "in a sense, the greatest and most powerful
attribute of government," the exercise of the power may be judicially
inquired into and corrected only if it is capricious, whimsical, unjust or
unreasonable, there having been a denial of due process or a violation
of any other applicable constitutional guarantee. As this Court held
through Justice Jose P. Bengson in Philippine Long Distance Company
vs. City of Davao, et al. police power "is elastic and must be responsive
to various social conditions; it is not confined within narrow
circumscriptions of precedents resting on past conditions; it must
follow the legal progress of a democratic way of life." We were even
more emphatic in Vda. de Genuino vs. The Court of Agrarian Relations,
et al., when We declared: "We do not see why public welfare when
clashing with the individual right to property should not be made to
prevail through the state's exercise of its police power."
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 Resolution No. 27, s-1960 declaring the western part of Highway
54, now E. de los Santos Avenue (EDSA, for short) from Shaw
Boulevard to the Pasig River as an industrial and commercial zone, was
obviously passed by the Municipal Council of Mandaluyong, Rizal in the
exercise of police power to safeguard or promote the health, safety,
peace, good order and general welfare of the people in the locality.
Judicial notice may be taken of the conditions prevailing in the area,
especially where Lots Nos. 5 and 6 are located. The lots themselves not
only front the highway; industrial and commercial complexes have
flourished about the place. EDSA, a main traffic artery which runs
through several cities and municipalities in the Metro Manila area,
supports an endless stream of traffic and the resulting activity, noise
and pollution are hardly conducive to the health, safety or welfare of
the residents in its route. Having been expressly granted the power to
adopt zoning and subdivision ordinances or regulations, the
municipality of Mandaluyong, through its Municipal Council, was
reasonably, if not perfectly, justified under the circumstances, in
passing the subject resolution. 68

xxx xxx xxx

Undoubtedly, the MMC Ordinance represents a legitimate exercise of
police power. The petitioners have not shown why we should hold otherwise
other than for the supposed "non-impairment" guaranty of the Constitution,
which, as we have declared, is secondary to the more compelling interests of
general welfare. The Ordinance has not been shown to be capricious or
arbitrary or unreasonable to warrant the reversal of the judgments so
appealed. In that connection, we find no reversible error to have been
committed by the Court of Appeals.
WHEREFORE, premises considered, these petitions are DENIED. No
pronouncement as to costs.
IT IS SO ORDERED.
Fernan, C.J., Melencio-Herrera, Gutierrez, Jr., Cruz, Gancayco, Bidin,
Cortés, Griño-Aquino, Medialdea and Regalado, JJ., concur.
Narvasa, J., is on leave.
Paras, J., took no part; member of the Bel-Air Village Asso.
Feliciano, J., took no part; member of BAVA.
Padilla, J., took no part; former Board Member of Ayala Corporation.

Footnotes

1. Consolidated pursuant to our Resolution dated July 18, 1988.

2. Rollo, G.R. No. 71169, 102-113. The decision of the Court of Appeals makes
mention of specified areas in Makati having been converted into a "High
Intensity Commercial Zone" as well as "Low Intensity Residential" (see page
9 of this Decision). This should be either "high" or "low" density.
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 3. Jurado, Desiderio, J.; Campos, Jr., Jose and Camilon, Serafin, JJ., Concurring .
Pascual, Crisolito, J., Dissenting. The decision set aside, dated October 1,
1982, was penned by Hon. Gregorio Pineda, Presiding Judge, Court of First
Instance of Rizal, Seventh Judicial District, Pasig, Metro Manila, Branch XXI.

4. Rollo, id., 128.

5. Civil Case No. 49217, Hon. Rafael T. Mendoza, Presiding Judge; rollo, G.R. No.
74376, 82.
6. Rollo, id .

7. Camilon, Serafin, J.; Pascual, Crisolito, Campos, Jr., Jose, and Jurado, Desiderio,
JJ., Concurring.
8. Rollo, id., 34; emphasis in original.
9. Rollo, G.R. No. 76394, 24-25.
10. Civil Case No. 33112; see id., 8, 10.

11. Jurado, Desiderio, J.; Campos, J., Jose and Camilon, Serafin, JJ. Concurring ;
Pascual, Crisolito, J., Chairman, on leave.
12. First Division.
13. Rollo, id., 81.

14. Per Resolution, dated February 22, 1988.

15. Per Resolution, dated April 4, 1988.
16. See fn. 1, supra.

17. Rollo, G.R. No. 78182, 36-38.

18. Camilon, Serafin, J.; Pronove, Ricardo and Cacdac, Bonifacio, JJ., Concurring .
19. Civil Case No. 27719, Regional Trial Court, Makati, Branch 145.
20. Rollo, G.R. No. 82281, 33-35.

21. Civil Case No. 8936, Regional Trial Court of Makati, Branch CXL, Hon. Ansberto
P. Paredes, presiding, see id., 32.
22. Bengzon, Eduardo, J.; Kapunan, Santiago and Buena, Arturo, JJ., Concurring.
23. Rollo, id., 38.

24. See supra, 103-108.

25. Id., 32.
26. Id., 38.
27. Id., 50-51.

28. 78 Phil. 196 (1947).

29. Supra, 209; emphasis supplied.
30. No. L-14551, July 31, 1961, 2 SCRA 873.
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 31. Supra, 877.
32. Supra.
33. No. L-60129, July 29, 1983, 123 SCRA 799.

34. The rule states: Questions that may be decided. - No error which does not
affect the jurisdiction over the subject matter will be considered unless
stated in the assignment of errors and properly argued in the brief, save as
the court, as its option, may notice plain errors.
35. See rollo, G.R. No. 71169, id., 168. The pertinent paragraph of the answer
states:
10. That in 1975, the Municipal Government of Makati enacted a zoning
ordinance and classified the blocks between Buendia Avenue Extension and
Jupiter Street as an administrative office zone with the north-northeast
boundary of the zone extending up to the center line of Jupiter street. Under
the said ordinance, Bel-Air Village has likewise been classified into a
residential zone, with its boundary at the southwest being delimited only up
to the center line of the Jupiter Street. Similarly, under Ordinance No. 81-01
of the Metro Manila Commission, Jupiter Street has been made a common
boundary of the commercial blocks along the north side of the Buendia
Avenue Extension and the Bel-Air Village Subdivision, so that the said street
is subject to the common use of the owners of both the commercial blocks
as well as the residential areas.

11. That the restoration/reconstruction of the wall on the blocks along the
southern side of Jupiter Street will close the entire southside portion of
Jupiter Street and will illegally deprive the abutting lot owners on the
commercial blocks of their rights to have the street kept open and to have
access to the street, in violation of Act 496, as amended by Republic Act
440.

36. See id., 169.

37. Exhibits Nos. "18" and "19"; see id., 168.
38. Id., 116.

39. Id.
40. Id., 66.
41. Rollo, G.R. No. 71169, id., 124.
42. Id.

43. Id.
44. Id., 124-126; emphasis in original.
45. Id., 52.

46. CIVIL CODE, art 1157, par. (2).

47. Supra, art. 1305.
48. This case should be distinguished from Perez v. Pomar, 2 Phil. 682 (1903),
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 where it was held that "whether the plaintiff's services were solicited or
whether they were offered to the defendant for his assistance, inasmuch as
these services were accepted and made use of by the latter, we must
consider that there was a tacit and mutual consent as to the rendition of
services." (At 686.) In that case, the defendant had enormously benefitted
from the services that entitled the plaintiff to compensation on the theory
that no one may unjustly enrich himself at the expense of another. ( Solutio
indebiti) The facts of this case differ.
49. Rollo, id., 38.
50. Id., 40.

51. Id., 47.

52. Id., 183-185.
53. Id., 92.
54. Id., 105-106.

55. Id., 193; emphasis in original.

56. Id., 45.
57. Id.

58. Id., 108-110.

59. Id., 193.
60. Id., 38.

61. RULES OF COURT, Rule 46, sec. 18.

62. Rollo, G.R. No. 71169, id., 126.
63. Id.
64. See rollo, G.R. No. 71169, id ., 117.

65. CIVIL CODE, supra, art. 1159.

66. Supra, art. 1306.
67. No. L-24670, December 14, 1979, 94 SCRA 533.

68. Supra, 545-547.

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